Risk Retention Expansion Amendments of 1986 - Amends the Product Liability Risk Retention Act of 1981 to exempt risk retention groups and purchasing groups (businesses which organize to purchase personal risk and liability insurance on a group basis) from State laws which prohibit, regulate, or otherwise discriminate against such groups. Revises the definition of "organization" eligible to form risk retention and purchasing groups to include businesses, professional groups, hospitals, schools, churches, or other institutions, and State and local governmental entities. Retitles such Act the Liability Risk Retention Act of 1986. Excludes from the coverage of this Act product liability risk retention groups formed on or after January 1, 1985, under the laws of Bermuda or the Cayman Islands. Subjects such groups to State no-fault automobile insurance requirements. Limits the authority to provide insurance under such Act to liability insurance.