Los Angeles County announced Thursday it is opening an investigation into how State Farm General has treated January wildfire victims after complaints that their claims have been delayed, denied and underpaid.

The state’s largest home insurer was notified of the probe in a letter that included demands for a wide range of data and documents to determine whether the company has violated the state’s Unfair Competition Law.

Violations can result in injunctive relief, restitution and civil penalties of up to $2,500 per day per violation.

Assistant County Counsel Scott Kuhn said the probe’s goal is not necessarily to go to court, but to alter the company’s practices and ensure policyholders receive the payouts they are due.

“We want State Farm to take care of its customers as soon as possible, because time is of the essence. We want residents to be able to get back in their homes and start the rebuilding process,” said Kuhn, who is leading the investigation. “We certainly would like to avoid litigation and just have State Farm do right by its customers.”

Bob Devereux, a State Farm spokesperson, said in a written statement that “the goals of this investigation are unclear but what is clear is that it will be another distraction from our ongoing work in California to help our customers recover from this tragedy. State Farm is committed to paying customers what they’re owed.”

The January fires that damaged or destroyed nearly 13,000 homes and killed 19 people resulted in estimated losses of $7.6 billion for the insurer. State Farm said Thursday that it has received more than 13,500 claims and paid nearly $5 billion to victims.

The county’s probe puts more pressure on the insurer following an announcement by the Department of Insurance in June that it was opening a “market conduct exam” of State Farm following the same types of complaints.

Such an exam is an administrative action that department officials have noted can result in changes in practices, penalties and hundreds of millions of dollars being passed on to policyholders. The department said it would expedite the investigation and it could be completed in months.

“These allegations mirror issues the Department is investigating in response to complaints about State Farm received directly from wildfire survivors,” Insurance Commissioner Ricardo Lara said in a statement Thursday. “We will release our findings publicly as soon as they are ready. A market conduct examination is an extensive fact-based review dictated by law.”

Attorney Harvey Rosenfield, founder of Los Angeles advocacy group Consumer Watchdog, said the county’s action is a step up from a market conduct exam because it is a civil action that can result in a court order changing insurer practices, refunds to consumers and larger penalties. Additionally, if criminal fraud is discovered, that can can be prosecuted.

“State Farm is now in dangerous territory. Every denial of a survivor’s claim, every delay of a survivor’s claim can result in massive financial consequences for the company,” said Rosenfield, also author of Proposition 103, the 1988 ballot measure that governs home insurance in the state.

With the first anniversary of the Palisades and Eaton fires approaching, wildfire victims have grown impatient with Lara, saying their complaints against State Farm have not been resolved.

At a rally last week, victims from both fires urged Gov. Gavin Newsom to call on Lara to resign, alleging he is too cozy with insurers. A department spokesman said Lara acted swiftly and decisively to respond to the fires and assist victims.

Lara’s eight-year term ends next year and he has resisted calls for his resignation.

Consumer advocates praised the county’s decision.

“In the absence of state leadership, today’s county investigation is a major step forward. It matters not only for Los Angeles fire survivors, but for every Californian who pays premiums and expects the protection they paid for when disaster strikes,” said Joy Chen, executive director of the Eaton Fire Survivors Network, which held last week’s rally.

The county letter sent to State Farm headquarters in Bloomington, Ill., demands “all documents, reports, spreadsheets, databases, summaries, dashboards or other records that track, compile or reflect” January 2025 wildfire claims. Included in that are communications between the company and its customers, documents submitted by policyholders and the outcomes of the claims.

It is also seeking documents that govern the company’s claims-handling practices, its policies regarding adjusters and its use of artificial intelligence, among other issues.

Kuhn said that under the state’s Unfair Competition Law, the county counsel’s office does not need a formal vote of the Board of Supervisors to proceed with a civil action. However, he said the board has given unanimous support of the investigation and it would be kept apprised of its progress.

“Altadena residents have already endured unimaginable loss and they shouldn’t have to fight their own insurance company to recover,” said Los Angeles County Board of Supervisors Chair Kathryn Barger, whose district includes Altadena. “The county has heard loud and clear from wildfire survivors that State Farm’s delays are standing in the way of rebuilding.”

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