Problems with core systems are scary for any insurance carrier, but the thought of investing heavily in today's economy is enough even for the bravest to keep on the nightlight. Still, as Craig Weber, senior vice president in the insurance practice at Celent, points out, insurers really can't afford to stop spending.

"Most carriers have done something to get on track--say, a five-year plan--to improve service," says Weber. "Cutting that off at this point would be throwing a lot of money away. Most can't afford to stop what they are doing."

The insurance carriers that have not started a major initiative around their core systems are about to be left behind, believes Weber. "Competitive pressures will dictate something needs to be done over the next three to five years," he says.