A state grand jury was impaneled in Pascagoula, Miss., last week to hear evidence in an investigation of State Farm's handling of Hurricane Katrina claims, a week after the carrier was hammered with a $2.5 million punitive damage award.

The attorney general's inquiry is looking into allegations that engineering reports may have been altered to minimize wind damage.

The probe, being conducted by State Attorney General Jim Hood, began months ago when subpoenas were issued, and was the subject last year of an unsuccessful court challenge by the insurer and a Houston engineering firm.

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