Get a box cutter. Cut and remove the insulation board right along the base of the stucco. Clean up all the stucco dripping and make sure the grade flows away from the house. Your finished soil line should be below the stucco.

It is to insulate a radiant floor heat. The insulation goes all the way in under the floor heat tubing. What is showing is the side of thick foam board. If I start cutting, there will be no natural place to stop.

Initially, they were going to pile up the dirt against the bare foam. I thought it should be protected from water and objected. Now, they plan to slap a piece of metal flashing. I am not sure it will be water tight enough or hold well. And also bugs, carpenter ants, termites may only be too happy to pass it up. I am guessing they were going to put in a concrete walkway originally, pouring concrete against the foam. We may still do that if that is the best way.

Not enough information. Be specific about the insulation material. Draw a sketch section through the area in question.

No idea what the insulation material is. It is pink, about 4-5" thick, light but dense stuff. I can try to sketch but it is simple. They put the insulation board down on the compacted dirt all over the house then radiant heat tubing. After that they poured concrete slab. The sketch of cross section would be dirt at the bottom, insulation board 4-6" thick, tubing about 1/2", metal grid for concrete concrete slab about 6" thick. That's all I know. In the above picture, terra cotta colored stucco is goes down to the grade, the concrete you see on the left is the concrete slab, that continues into the house all over. This particular foam board is actually to the side of the slab not underneath. While typing I am realizing that the entire foam insulation laid down on the ground is in contact with dirt without any protection. Does it mean it is ok to touch the dirt? Should it be different if it is on the side and exposed instead of in the ground?

The foam board is the moisture barrier.

That's better. That means all I need is to protect from damage and a piece of metal flashing will work?

Yup. That’s what I’d do. To be sure, though, look up the installation instructions online.

It wouldn't hurt to google sleuth the insulation manufacturers specifications and install instructions.

I could. It is touching dirt under the slab, huge area. Compared to that the exposed side is minor. If I have a moisture problem protecting the side won't make much difference.