I am a US citizen living abroad. I keep a US checking account in the state of Idaho. Would a wire transfer from a foreign insurance company to this account be subject to tax or other scrutiny? The amount would be $100,000 or more.

Yes, that amount of money WILL cause some scrutiny. However, if you inform the bank it is coming, they will forward you the necessary forms to complete to properly account for the money.

The $100K may or may not be subject to income taxes; it depends on the nature of the insurance disbursement.

There is no tax involved when you transfer money. However, you must file Form Form TD F 90-22.1 on or before June 30, 2009.
United States Treasury Regulation 31 CFR 103 require that every United States person file this form TD F 90-22.1 if at any time during 2008, you have an interest in or a signature or other authority over a financial account in a foreign country, such as a bank account, securities account, or other financial account and the total amount at any time in the year was $10,000 or more.
Read Your U.S. Tax Return: U.S. Citizen or Resident with Foreign Income (http://taxipay.blogspot.com/2008/03/us-citizen-or-resident-with-foreign.html)

Agreed; however, the form you will need to file for the money transfer is Form 3520, and that is filed with the bank receiving the transfer.

What kind of insurance policy does the amount received relate to? Life insurance? Did someone else die and you received life insurance proceeds or did something else occur. Please explain.

I have an online fund transfer account with the Citic Bank of china and I want to transfer the funds back to my country New Zealand. I have been advised that I will need to pay 10.000.00 USD before the funds can be transferred. They have also asked me to pay the full amount upfront and state that it cannot be deducted from the fund itself because of an insurance cover that stops them from accessing it prior to transfer.
Is this correct or not please.

Is the account in a U.S. bank, or is it in China?

The money is in the citic Bank of China.

By your answer, that means the transfer is from China to New Zealand.

That being the case, I cannot answer your question, because U.S. tax law does NOT come into play.