I think my best friend's fiance is insane, but nobody will tell him.
How long have you thought he was insane?
Now for very long. I tried to give the guy a chance, but it turns out he's nuts. He's always trying to control everyone.
If you really think this about your friend's fiance, you should talk to them about how you are feeling. You need to be careful about how you bring this subject up since it's a sensitive subject.
He should be in a mental institution.
It's a good idea to bring up the subject with your friend since it seems like you think they are an in abusive relationship. However, don't use phrases like you think their fiance should be in a mental institution. Try to be calm and nice about this so your friend is more likely to take your view into consideration.