Could be an issue if they make a buff or something that affects dot damage specifically.
Also, the combat log says "hit" rather than "damaged" for the procced ticks, so it's obvious that they are able to distinguish between the two enough that it wouldn't be hard (I think) to make sure that it can only proc off of normal ticks.
I think this is a better version of insanity than the last one, but I still feel that it's lacking. They could easily fold it in with mind-spike. It seems that it's a second spell that's a part of an already minuscule niche. I'd prefer that they made insanity a spell which spread our active dots to nearby enemies to make our aoe rotation even a little-bit more interesting than mind-searing the whole time. (Or something along that vein)