I think it's more likely that obesity causes diabetes, buying into the fat threshold idea. Yes, insulin goes up with insulin resistants and type II (until it can't). But it goes up in part because the body is resistant to storing more nutrients, but also largely because of dysfunction in the liver and pancreas due to an increase in certain aspects of lipid metabolism. Subcutaneous tissue is overwhelmed in its ability to sequester fat, internal organs are exposed to increased levels of fatty acids and sugar, this is damaging to the tissues.

The increased insulin might help to make the subcutaneous fat grow beyond where it would otherwise have--but first there's a failure at the level of the subcutaneous tissue that has consequences to internal organs that increases that insulin that might further increase subcutaneous tissue.

Which came first, the chicken or the egg? My answer is fish, I think there were eggs long before there were chickens.