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Can insulation touch the hot pipe directly?

That's the design intent for hot service — the inner face IS the hot face, which is why service-temperature limits exist per material. Two real caveats: (1) chloride content — over austenitic stainless steel, insulation must meet low-leachable-chloride specs (ASTM C795) to avoid stress-corrosion cracking; (2) first heat — binder-bearing wools smoke as organic binder burns off near 200–250 °C (plan ventilation); binder-free cores (needle mat) avoid this, one reason they're standard inside removable covers.

Compute your own case: free heat-loss calculator · materials library: 12 datasheets · related: What is CUI (corrosion under insulation)? · What is economic thickness of insulation? · R-value vs k-value (λ) — what's the difference? · How hot can an exposed surface be for worker safety?