Fax isn’t encrypted. What keeps it alive is just inertia.
As for why your insurance company won’t take emailed photo, that probably has more to do with whatever system your insurance is using for their backend.
Email content can be end to end encrypted by GPG and S/MIME as well as through a few other standards. Email in transit can be (but not always is) encrypted via TLS.
The reason encryption is not default is because (I think) of backwards compatibility. E-mail originated at a time when almost nothing electronic was ever encrypted, including the username and password you used to log into a system with. Most of the encryption we use of today has simply been “bolted on” to standards that were already in place at the time and it did take a few tries to get it right.
When the internet was first getting started, few people, if anyone, thought it would become as invasive (possibly the wrong word) as it has become. Everyone on the net knew each other. They were friends, why would they ever need to hide anything from each other. /s
That and the early systems couldn’t really spare the processing power for encrypting and decrypting things.
The only stupid question is the one you don’t ask.
First, I don’t like calling proprietary software “official”. Proprietary software is just software with closed source code. What makes something official is someone deciding “OK, this is what we are going to use” or that it definitely came from a particular source. Getting Docker directly from Docker repositories rather from a distributions repository for example.
My general take is if FOSS can do the job, I use FOSS. If FOSS can’t do the job I need, then I will go with the best proprietary solution to my problem. If I go with FOSS, I tend to prefer using the repository of the project in question rather than my distributions repository. The projects repository tends to be more up to date and there are fewer opportunities for ba actors to play with the code. Downside is that these repositories may introduce changes that may bork your OS when/if you upgrade to a newer major version. FlatPacks and AppImages help to mitigate this.
Hope that helps.