Final answer:
The majority of a boiler and machinery policy premium is used for underwriting and company expenses, including administrative costs that are necessary to operate the insurance business effectively, leaving room for profits.
Step-by-step explanation:
The majority of the premium for a boiler and machinery policy is principally used for underwriting and company expenses related to running the business. This includes administrative costs such as hiring workers, administering accounts, and processing insurance claims. It is essential that the average person's payments into insurance over time must be adequate to cover the average person's claims, the costs of running the company, and additionally provide room for the firm's profits.