So insulin is important when it comes to building muscle?

Insulin is a hormone that is secreted by the pancreas. Its primary job is to lower blood sugar levels by allowing sugar to enter tissue, primarily muscle and fat. Insulin works with another hormone, glucagon, which raises blood sugar, to keep blood sugar levels within a normal healthy range. Insulin also has a secondary effect on fat synthesis and facilitates protein synthesis.

When someone has diabetes, their body either does not make insulin at all (type 1) or cannot use the insulin it is making (type 2). Both situations result in elevated blood sugar levels, which can lead to all kinds of health consequences that include nerve and kidney damage and increased risk of heart disease.

The fantastic thing about exercise is that it has an insulin-like effect on blood sugar. That is, when muscle contracts during exercise, those muscle contractions help to pull sugar out of the blood and into the muscle where it is broken down and used for energy. This is how I treat my diabetic patients with exercise. While both cardiovascular and resistance exercise yield drops in blood sugar following an exercise bout, I have observed, at least in the population I work with, that cardiovascular exercise tends to result in a greater drop in blood sugar following exercise than resistance training.

American College of Sports Medicine (ACSM) recommends that type 1 diabetics be prescribed exercise just as normal healthy individuals would be with the caveat that type 1 diabetes need to be more cognizant of their blood sugar levels, which they are often experts at. ACSM with the American Diabetes Association just published new guidelines for exercise and type 2 diabetes last December that focus on the acute and chronic effects on exercise on blood sugar and ensuring a safe exercise environment.

Both type 1 and type 2 diabetics can build muscle mass, and there is evidence that increased muscle mass results in improved blood sugar control in people with and without diabetes. My primary concern for a diabetic pursuing bodybuilding, just as it would be for someone with diabetes embarking on marathon training, would be ensuring that blood sugar levels remain within safe ranges during and after training sessions.
I hope this helped to answer your question!

As far as insulin's effects on muscle growth. A review of the literature by Dr Robert Wolfe (one of the foremost experts in this field), found that insulin increases the muscle-building process (muscle protein synthesis) only when adequate amounts of amino acids are available - thus the recommendation to have a "fast" protein (like whey protein) after training ALONG WITH carbohydrates (which stimulate insulin). Also, the carbs have the dual effect of providing the sugar to restore glycogen (energy storage) in muscle.

Insulin also works to reduce muscle protein breakdown.

Many bodybuilders actually inject insulin so as to increase their muscle size - this is a VERY dangerous practice that can be fatal and probably causes much more fat gain than muscle gain...insulin in healthy people causes ravenous hunger!