Contacts app in Android 7.1 claims that I have no images on my device

On my Motorola Moto Z2 Play with stock version of Android 7.1.1 currently I have: - 188 photos in DCIM > Camera folder, - 10 pictures in Pictures > Contacts folder, - 5 pictures in Pictures > Icons folder, - 24 pictures in Pictures > Wallpapers folder. Yet, when I am trying to assign a new photo for one of my newly created contacts (Google Account) in Contacts app it claims that I have no images in my device and does not open a file browser / does not allow me to pick any photo for given contact: What am I missing here? How to workaround this weird problem and be able to pick a photo for any contact (other way than using PC for this purpose)?