make your own insulation, to start with.
Any insulation at all is better than none. It slows heat transfer. Never stops it, just slows it down. The tank has a bit of insulation to start with. No need to leave it at that. Add your own. Anything at all. Either to block airflow, or to block what is known as 'radiation'. A radiator radiates. Your heater radiates, just a bit less in one area, and more overall, so you don't notice it as much as you would with a radiator.
How to start? Believe it or not, anything anything anything that you have at hand and that you feel is safe to put there is fine to start with. See if you end up with a 'significant' amount of heat between your new barrier and the heater, later, when you slide your hand in there. If so, then the thing you put there is working as expected. Covering way more than half of the hot water heater will cause you to feel a sensation that a lot of heat is coming out of the uninsulated sections. More about this sensation later. Meanwhile, enjoy the testing and trial process. Bye for now.