What the hey. I'll just take a piece of handy dandy Nashua Aluminum Duct Tape with a bit of closed cell foam weatherstrip and tape that jasper down in its groove. I was wondering why the manufacturers don't insulate their heater assemblies? That big ole stainless tube strapped on its Aluminum cradle seems like one big honkin heat sink to me. Perhaps it's a minimal heat loss item with most of the heat transfer directly from the heating element to the water. That brings up the question whether your customers saw any change in energy usage with your setup? It just seems to me that the original exterior heat exchanging elements are a inefficient way to transfer heat to the water flowing through the tube. Thus the cheesy insulation blanket? I spent some time researching elements and ordered a 4KW universal with the Tefel coating (teflon/titanium). It was about twenty bucks more than some of the uncoated ones but it's still $170.00 cheaper than a OEM replacement. I probably should have asked about the coating business, but I got tired of looking at elements and spa websites. The OEM is a 4kw unit and it worked fine at maintaining the water temp. I figured matching the input would put no added stress on my relays.

Yes that's pretty much it. The coated elements usually will last longer.
The insulation is pretty much not necessary because of the insulation of the spa - that is, most of the heat from anything underneath will radiate into the water anyway.

The blanket was used - my guess is because it is no where near as efficient of a heat transfer method than direct element contact.

A update for Pageup
I successfully converted the heater to a internal type. I nailpunched the two marks and used a succession of titanium drill bits up to the half inch necessary. Used a couple drops of Marvel Mystery Oil to keep the heat down with each bit. The whole operation went smoothly and the holes were clean. They lined up perfectly with the element. 102 degrees and running, and no leaks. Just wanted to thank you for your slick idea. Steve

Awesome!
I love it when a plan comes together!

Cheap heater elements from here on out for ya!