I'm getting good at answering my own questions today. colorRgbFormat is actually a parameter therefore the call should be:
calendarList = api.calendar_list.insert.request_schema.new({
'id' => cal_id,
'hidden' => false,
'selected' => true,
'backgroundColor' => cal_color,
'foregroundColor' => '#000000'
})
result = client.execute(
:api_method => api.calendar_list.insert,
:body_object => calendarList,
:parameters => {'colorRgbFormat' => true,}
)