Until recently, people on tablets for diabetes did have to inform DVLA, but no longer. I must admit I feel this leaves a group of people on unrestricted licences who are at risk of hypos.
There are other reasons why someone might have a licence revoked eg loss of feeling in feet (relevent for foot pedals, although if only left foot is affected, an automatic car / limited automatic licence would be an appropriate adjustment), poor eyesight etc.
When informing car insurance companies, I've only ever been asked (a) have I informed DVLA? and (b) what licence do I hold? (ie 1, 2 or 3 year time limted licence) My understanding is that if you withhold infomation from an insurance company, such as the fact you have type 1 diabetes, you could have any claim refused and insurance withdrawn, which may make getting future insurance with other companies more difficult.
When declaring hypos to doctors, I feel it's always wise to point out that I can always detect hypos before they get dangerously low - in fact, I can feel low at 4.5mmol/l, always before reaching 3.5. It's the truth, but also supports my case for being safe to hold a driving licence.