Insurance Commissioner Ricardo Lara, who recently approved an emergency rate increase for the company, called the examination one of the department's most powerful tools.

California's top insurance regulator is launching a probe into State Farm over its handling of claims from Los Angeles-area wildfires that broke out in January.

State Farm, which serves approximately one million homeowners in California, said it is cooperating with the regulatory review. The company reported receiving about 13,000 wildfire-related claims and said it has paid out roughly $4 billion to affected policyholders.