Cloth wiring is generally accepted by most insurance companies, and no major changes need to be done other than ensuring the integrity of those wires are sound and not a safety issue.  We often provide GFCI protection to these circuits as the majority do not have a ground.  The only cloth wiring that is required to be changed is the feeder wires that provide power to the panel.  The large majority of insurance companies will not insure a house with those wires.