Hair loss is not a typical side effect of diabetes. However chronic disease like diabetes can reduce the body's immune function leading to secondary problems. Especially if your dog is an uncontrolled diabetic or a diabetic escaping good control immune system function is a concern. Your dog may have demodex or scabies mites, yeast or bacterial infection, nutritional concerns, ringworm, or an endocrine (hormonal messenger system) disease like hypothyroidism or Cushing's disease.
Your dog needs to be examined by a veterinarian to monitor his diabetes and screen for skin disease.
Your dog needs to be examined by a veterinarian to monitor his diabetes and screen for skin disease.