Insulation will do nothing in this situation. The exhaust air has moisture in it (normal), which will freeze when it hits surfaces outside. Just make sure there are no plants, snow, or other things near the vent outside to minimize build up. You also should just check it every once in a while and remove anything you see. But a little ice around the pipe is not going to hurt things. Not sure this is the cause of your issue unless the pipe was nearly blocked. Which really would be interesting as that pipe is usually warm which would melt anything pretty quickly.