Yes, it's used in the United States. It's used for a whole range of meanings: the straightforward literal meaning, or various figurative meanings.
Steve Jobs of Apple Computer loved to use the phrase "insanely great."
"Dave's Insanity Sauce" is a hot sauce made in California that gets its name because it is extremely hot. (It has been measured at 180,000 Scoville units compared to 2,500-5,000 for Tabasco).
A current U.S. song lyric contains the lines:
"You know you like it but it drives you insane;
You know you like it but it drives you insane;
You know you like it but you're scared of the shame--
What you want, what you gonna do?..."