I'm not wett certified but I am tssa licensed for gas oil and propane. You should never insulate around a liner, for one the insulation will melt. the top of a s.s. wood liner is frekin hot. Years ago gas liners were insulated at the top and then cemented in, I now make a living changing these because the insulation retains water and promotes rot. They also used to pour bags of vermiculite (the white granuals in potting soil) same result rotting liners.
I am having a wett certified installer install a wood insert in my home thursday so I'll ask him. I would have attempted the install myself but a cutting torch is required to get my liner past the baffles in my existing fireplace.
One last note do not install the wire in the chase(it will melt), bring your electrical out the front and across the hearth
Brian McCrostie
McCrostie Mechanical