Either soft fiberglass (felt?), or maybe more likely flame retardant polyester or other poly felt material, I suppose would be better. Or aluminum foil tape, reflective to keep IR away.
But way more likely is sheer overthinking.
Could very well be that the tiny amount of heat the cap soaks up, while it raises its temperature marginally, it also has more area to dissipate, lowering temperatures overall. What about that?
Introducing thermal insulation anywhere is probably a mistake made elsewhere in the design, not being able to sink it directly instead. (Aside from anything that's intended to get hot, of course.)