That is exactly why they should be in a forensic correctional facilities, but only if they have a criminal behaviors, because they might have Egomania or Megalomania, those two constructs can explain delusion of grandeur in extreme narcissism.
Only people convicted of crimes are incarcerated. Mentally ill people who haven't been convicted of crimes can sometimes be involuntarily committed to mental hospitals but it's hard to do where I live because the patient has to be evaluated by two different physicians. Narcissists don't believe there is anything wrong with them and almost always refuse to cooperate in being evaluated.