Charles Crossing is not insane.
He is Laura Riding, whom Robert Graves (the real-life writer who wrote The Shout), was having a long-term affair with, an affair that had a predictably destructive impact on Graves' first marriage.
Graves braided a personal story with supernatural elements for effect, but beneath the supernatural was a story of unhappily married people yearning to break free of marriage, and for Laura, to break free of life (she attempted suicide during their affair, which caused the dissolution of Graves' first marriage), nothing more, nothing less, and the terror shout was exactly what it was - a shout to exorcise one's unhappiness, one's demons, one's pent-up emotions, etc.
The insane asylum - once upon a time, during Graves' lifetime, it was easier to label someone insane who wanted to escape marriage or commit suicide. Now these feelings are discussed, they're not dismissed as insane.
In the novella and film, Charles said he lived in the Australian outback for 18 years, food was hard to find, and one year there was no rain until a magician cut himself open and pushed his fingers into his body and ripped his flesh out, and it finally rained. A metaphor for the state of his marriage - a dry wasteland of a marriage, he was starving to death emotionally/spiritually, he was so emotionally/spiritually thirsty he described his thirst as a year without rain, and he was proverbially tearing his flesh apart until he murdered his children to escape his marriage. Then he encountered Anthony and Rachel, a couple whose marriage long ago fell apart but who kept playing the marriage game because they did not know what else to do. They had not yet reached the "destroy this marriage now, no matter the cost" stage Charles reached, but Charles' suicidal presence began that process.
Anyway, that is food for thought, based on the real life of Robert Graves.